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Rising mean incomes for whom?

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  • Liang Frank Shao
  • Melanie Krause

Abstract

Not everybody is benefiting equally from rising mean incomes. We discuss the mean-income population share (MPS), the population percentage of earners below mean income, whose evolution can capture how representative rising mean values are for middle income households. Tracking MPS and its associated income share MIS over time indicates to what extent economic growth is inclusive of both the middle and the bottom of the income distribution. We characterize MPS and MIS analytically under different growth scenarios and compare their parametric estimation using micro-level and grouped income data. Our empirical application with panel data of 16 high- and middle-income countries shows that in the last decades rising mean incomes have mostly not favored middle income households in relative perspective, while the overall welfare effects of the changes in MPS and the correlation structure with the Gini coefficient are mixed.

Suggested Citation

  • Liang Frank Shao & Melanie Krause, 2020. "Rising mean incomes for whom?," PLOS ONE, Public Library of Science, vol. 15(12), pages 1-20, December.
  • Handle: RePEc:plo:pone00:0242803
    DOI: 10.1371/journal.pone.0242803
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    Cited by:

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    JEL classification:

    • C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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